A Bank Among Friends

The platform, which is the brainchild of developers Gavin Knight and Zach Doty, was launched Monday.

Unlike extant Bitcoin loans outfits such as BTCJam, Credible Friends is aimed not at those seeking loans, but at using preferential lines of credit to allow people to enjoy Bitcoin and its benefits. Through invites and social media, lines of credit will be offered exclusively from trusted sources: by friends to real-life friends.

“It’s about the relationship and the trust, not a credit score,” Knight explained to Bitcoin.com, noting that Credible Friends will not include an escrow feature or formal financial protection. “We want to leverage trust between friends in order to spread the amazing capabilities of Bitcoin.”

The Credible Friends app works by inviting users to set up a BTC wallet, which they then use to gain lines of credit and spend funds anywhere it is possible to spend BTC. Users are incentivized to offer lines of credit via an interest system – initially a flat rate of 25% APR, a portion of which is paid to them once the creditis repaid in full.

In turn, the credibility of borrowers – and the amount available to them to borrow – is determined by their reputation on the platform’s feedback system, similar to that found on services such as Localbitcoins.

Terms of lines of credit, such as length of time and amount, are decided by the two parties involved. Borrowers can even repay independently of the platform, such as in person or by other arrangement.

In terms of being a gateway into Bitcoin, the developers are keen to remove steps from the process and offer an umbrella outfit for receiving, holding, using and transacting in the currency. The formula is designed to slot into markets in which traditional loans are hard or impossible to secure, and where third-party trust is correspondingly lacking.

Bitcoin.com was able to get more information from Gavin Knight ahead of the launch, who talks about the ethos of personal P2P lending, the platform’s potential and the new style of spreading Bitcoin to the masses.

Bitcoin.com: Credible Friends does not include an escrow feature or any financial protection for lenders. Despite being aimed at lending between parties that notionally already trust each other, do you nevertheless think potential users could be put off by this? How would you address the issue of arbitrary trust should it prove to be a sticking point?

Gavin Knight: No as it’s revolving credit, and no loan service can really add an escrow feature because the funds are taken. This is the nature of lending, funds are spendable, and once taken it is between the two parties. We encourage people to do business with those they know, and utilize their past use of the system, and trust between parties.

BC: You mention the service is designed to be used in any market, not just the US, and especially in developing zones. How do you intend to police tools such as the ratings system and avoid fraud (eg. fake social media profiles, fake verification IDs), as well as cover multi-country legislation? Would a user from any country ultimately need a social media profile and form of ID in order to use the platform?

GK: Facebook and twitter are actually worldwide and we can utilize themin most markets besides the Chinese. Since user groups are isolated amongst friends, and not available to everyone this minimizes most of the risk. It’s advised to do business with users with existing standing, and that you can verify yourselves, as being accurate.

BC: Can you tell us more about how funds are stored, and the protection involved with user accounts? Do users require prior education in things such as 2FA in order to open an account?

GK: All user funds are stored in cold storage, meaning not accessible through the platform, with distributed keys. The hot wallet is filled with funds from the company directly. This is how we plan to launch initially, until our scale surpasses this. Our focus is to keep customer funds safe at all times, and take on the risk ourselves as a company with our own Bitcoin holdings.

What do you think about the friends’ P2P lending approach? Let us know in the comments sections below!

William Suberg is a freelance digital tech journalist who has written extensively about Bitcoin, the blockchain and the evolving cryptocurrency ecosystem for a variety of publications. He has been writing for Bitcoin.com since January 2016.

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